With both presidential candidates’ renewed embrace of tariffs to punish geopolitical adversaries and protect domestic industries, the campaign is putting Beijing’s record of intellectual property theft and cybercrime back under the microscope.
America’s best and strongest response would not include targeting China’s own patents. Rather than compromise the U.S. patent system — a lynchpin of our own economic might — we need to strengthen America’s intellectual property protections further.
Last year’s Prohibiting Adversarial Patents Act, for example, would have banned specific Chinese firms from purchasing or registering American patents and from enforcing patents they already hold in American courts. Though removed from consideration last November, largely for procedural reasons, its backers may yet revive it.
They are motivated by reasonable concerns. The Chinese Communist Party regime is challenging America’s leadership in key technologies like AI and telecommunications through state-backed programs, seeking to further its authoritarian policies, geopolitical interests and state surveillance programs.
That makes it tempting to stymie Chinese innovation by denying CCP-backed firms protection under the world’s leading intellectual property regime. It would also punish China for policy and court decisions that have undermined Americans’ intellectual property rights and abetted theft to profit Chinese firms.
However, this would compromise the integrity of America’s patent system, which has driven decades of American economic growth and tech leadership. The system secures property rights and provides an incentive for innovators to invest time, skill, training and resources to produce critical inventions that improve human life.
The rule of law, stability and certainty are central. Denying property rights based on an inventor’s nationality or another immutable characteristic is unprecedented.
For innovators and entrepreneurs, this could be seen as a violation of the spirit, if not the letter, of the Constitution’s guarantee of equal protection. It could therefore deter inventors here and abroad from seeking U.S. patents, driving them to register inventions under rival regimes overseas out of fear that their rights could disappear if they fell afoul of the wrong U.S. authorities (or the vested interests lobbying them).
It is also likely to trigger Chinese retaliation. American inventors may be denied patent rights in Chinese courts, facilitating even more theft. Once precedent is established that property rights can be invalidated for political reasons, other nations may respond with similar attacks on U.S. inventors’ patent rights due to perceived geopolitical slights or sanctions.
Finally, we should not negate a key benefit of the U.S. patent system: It incentivizes Chinese firms to disclose their innovations publicly in English to seek an American patent, thereby spurring further innovation by U.S. inventors.
Trade retaliation isn’t a zero-sum game. Even if weakening foreign patents could somewhat check the Chinese government’s political and economic interests, most everyone — including and especially U.S. consumers, who benefit from cutting-edge and potentially life-saving innovations — has something to lose.
Congress and the next president should instead focus on a few blind spots that are making U.S. innovation and intellectual property less competitive against China.
It should start by reforming the Patent and Trademark Appeals Board, an administrative tribunal that adjudicates patent validity disputes. Unlike district courts where “clear and convincing” proof is required, here patents can be declared invalid on a lower “balance of probabilities” standard.
This allows well-resourced tech and manufacturing giants that don’t want to pay royalties to invalidate owners’ patents more easily, thereby lowering entrepreneurial research and development incentives and making it harder for innovators to attract capital and investment. Many American inventors in sectors such as pharmaceuticals and tech are moving investment and registering patents in China and Europe, where courts have upheld patents invalidated in the U.S.
The Patent and Trade Appeals Board also allows lawsuit funders to bring duplicate challenges that increase inventors’ litigation costs. Even non-industry participants, like hedge funds, can launch predatory lawsuits and short stocks by depressing prices through such lawsuits. Reforming the board to balance patent holders’ and challengers’ interests better would do far more to support American innovation than further eroding intellectual property protections.
American innovators can also be protected from overseas infringement through like-minded alliances of pro-intellectual property liberal democracies to challenge and lobby in international forums such as the World Trade Organization. Unfortunately, private parties are often reluctant to mount such challenges against state-backed Chinese firms due to Chinese threats of sanctions.
The federal government can also withdraw support for intellectual property waivers, such as the pandemic-era waiver for COVID-19 vaccines, which was lobbied for by developing countries at the expense of U.S. companies and didn’t help a single additional patient get vaccinated.
Although China continues to act capriciously towards U.S. innovators through decisions that depress the patent royalties companies pay, it has also strengthened intellectual property protections for Chinese-registered patents to attract overseas inventors and spur its innovation ecosystem. It’s a losing strategy to respond by weakening America’s world-leading patent system.
Satya Marar is a visiting postgraduate fellow specializing in competition, innovation and governance at the Mercatus Center at George Mason University.